Officials with some of the remaining 11 Obamacare insurance startups say they need more help to remain viable, and that help wouldn't need congressional approval.
So far, 12 taxpayer-funded Obamacare consumer oriented and operated plans (co-ops) have shut down. To ensure that more don't meet the same fate, officials said the federal government needs to tweak its rules to help the remaining co-ops raise capital and market their plans.
The comments came during a hearing conducted by the House Energy and Commerce Committee's oversight and investigations subcommittee. It is the second hearing in three days on the co-ops, which were created to add competition on the Obamacare exchanges.
More than half of the 23 co-ops have closed down, and the 11 that are remaining say the rules of the game need to change for them to remain viable.
"When you send these little boats into a hurricane to learn how to sail, it is important for a federal backstop," said John Morrison, vice chairman of Montana's co-op.
Morrison said the co-ops, which opened in 2014, don't have the depth and reserves of larger and more established insurance companies.
"We didn't know what this risk pool would look like, that is why you have higher premiums this year," he said.
But Republicans on the panel were not inclined to create such a backstop.
"People have grown weary of bailouts," said Rep. Marsha Blackburn, R-Tenn., vice chairwoman of the full committee.
Congress has continually reduced the amount of funding to the co-ops. The Affordable Care Act initially allocated $6 billion when it was approved in 2010, and in the intervening years that amount was reduced by Congress to the $2.4 billion in loans already given out.
But Congress doesn't have to act to help the co-ops, said Peter Beilenson, who oversees Maryland's co-op.
"The solution is to allow individual co-ops to raise capital to meet these solvency needs," he said.
All of the 23 co-ops had to sign a loan agreement with the Centers for Medicare and Medicaid Services to get the loans. Co-ops were prohibited from offering necessary terms to outside investors to access capital, Morrison said.
The agency needs to amend the agreements so the remaining 11 co-ops can raise capital, Beilenson said.
Another complaint was co-ops were forced to give money to large, existing insurance carriers under the law's risk-adjustment program, Morrison said. The program forces Obamacare insurers with healthier patient pools to help pay those that take on too many older and sicker Americans.
The formula for the risk adjustment payments needs to be reworked to better take into account solvency issues with the co-ops, he added.
The agency also should allow the co-ops to use loan money for marketing, which could help them get enough enrollees, the officials said.
Dr. Mandy Cohen, CMS's chief operating officer, didn't directly address whether the agency could adopt those changes. She told the committee that the agency has taken a slew of steps to oversee the viability of the co-ops.
Cohen said the agency is also working to ensure it recover the money it loaned the failed co-ops.